<PAGE>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

                (x) Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                  For the fiscal year ended: December 31, 2000
                                       or

                  ( ) Transition Report Pursuant to Section 13

                 or 15(d) of the Securities Exchange Act of 1934

                         Commission file number: 0-18944

                      THE SECTOR STRATEGY FUND (SM) II L.P.
             (Exact name of registrant as specified in its charter)
             ------------------------------------------------------

            DELAWARE                                              13-3584544
 -------------------------------                             -------------------
 (State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                   c/o MERRILL LYNCH INVESTMENT PARTNERS INC.
                           PRINCETON CORPORATE CAMPUS
                       800 SCUDDERS MILL ROAD - SECTION 2G
                          PLAINSBORO, NEW JERSEY 08536
                          ----------------------------
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (609) 282-6996

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Limited Partnership
Units

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                                       Yes   X          No
                                                           -----           -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.                                                              [X]

Aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant: the registrant is a limited partnership: as of
February 1, 2001, limited partnership units with an aggregate value of
$19,500,318 were outstanding and held by non-affiliates.

                       DOCUMENTS INCORPORATED BY REFERENCE
The registrant's "2000 Annual Report and Independent Auditors' Report," the
annual report to security holders for the fiscal year ended December 31, 2000,
is incorporated by reference into Part II, Item 8 and Part IV hereof and filed
as an Exhibit herewith.



<PAGE>

                      THE SECTOR STRATEGY FUND (SM) II L.P.

                       ANNUAL REPORT FOR 2000 ON FORM 10-K

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                       PART I                                               PAGE
                                                       ------                                               ----
<S>        <C>                                                                                              <C>
Item 1.    Business......................................................................................     1

Item 2.    Properties....................................................................................     7

Item 3.    Legal Proceedings.............................................................................     7

Item 4.    Submission of Matters to a Vote of Security Holders...........................................     7


                                                       PART II
                                                       -------

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters.........................     7

Item 6.    Selected Financial Data.......................................................................     8

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.........    11

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk....................................    17

Item 8.    Financial Statements and Supplementary Data...................................................    18

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..........    18


                                                       PART III
                                                       ---------

Item 10.   Directors and Executive Officers of the Registrant............................................    18

Item 11.   Executive Compensation........................................................................    20

Item 12.   Security Ownership of Certain Beneficial Owners and Management................................    20

Item 13.   Certain Relationships and Related Transactions................................................    20


                                                       PART IV
                                                       -------

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K...............................    21
</TABLE>


                                       i
<PAGE>

                                     PART I

ITEM 1:  BUSINESS

        (a)    GENERAL DEVELOPMENT OF BUSINESS:

               The SECTOR Strategy Fund (SM) II L.P. (the "Partnership") was
organized under the Delaware Revised Uniform Limited Partnership Act on
August 21, 1990 and began trading operations on December 5, 1990 (`SECTOR II
Units'). A re-opening of the Partnership through the public offering of
SECTOR III Limited Partnership Units ("SECTOR III Units") commenced
operations on July 5, 1991. Units may be redeemed as of the end of each
calendar month. The Partnership engages (currently, through an investment in
a limited liability company, (see below)) in the speculative trading of a
portfolio of futures, options on futures, forwards and options on forward
contracts and related options in the currencies, interest rates, stock index,
metals, agricultural and energy sectors of the world futures markets. The
Partnership's objective is achieving, through speculative trading,
substantial capital appreciation, over time, while also assuring investors of
at least a predetermined minimum Net Asset Value per Unit as of the Principal
Assurance Date.

               Merrill Lynch Investment Partners Inc. ("MLIP") is the general
partner of the Partnership and selects and allocates the Partnership's assets
(through the Partnership's investment in ML Multi-Manager Portfolio LLC ("MM
LLC")), among professional advisors ("Advisors"), each unaffiliated with MLIP
and each of which trades independently of the others. The Partnership and MM
LLC are referred to throughout this document, either individually and/or
collectively, as the "Partnership". MLIP also determines what percentage of
the Partnership's assets to allocate to trading and what percentage to hold
in reserve. MLIP is a wholly-owned subsidiary of Merrill Lynch Group, Inc.,
which, in turn, is a wholly-owned subsidiary of Merrill Lynch & Co., Inc.
("Merrill Lynch"). Merrill Lynch Futures Inc. ("MLF") is the Partnership's
commodity broker. MLF is an indirect wholly-owned subsidiary of Merrill Lynch.

              MLIP became a member of Merrill Lynch Investment Managers
("MLIM") - Alternative Investments Group during October 2000. MLIM's
Alternative Investments Group creates and manages a variety of alternative
investment products, including managed futures funds, hedge funds, funds of
funds, exchange funds and private equity funds. MLIP is currently intending
to convert to a Delaware limited liability company to be named MLIM
Alternative Strategues LLC. This conversion is expected to occur during 2001.

               Prior to October 1, 1996, the Partnership placed assets with
the Advisors by opening individual managed accounts with them. For the period
from October 1, 1996 to May 31, 1998, the Partnership placed assets with
certain of the Advisors through investing in private funds ("Trading LLCs")
sponsored by MLIP, through which the trading accounts of different
MLIP-sponsored funds managed by the same Advisor pursuant to the same
strategy were consolidated. The only members of the Trading LLCs were
commodity pools sponsored by MLIP. Placing assets with an Advisor through
investing in a Trading LLC rather than a managed account had no economic
effect on the Partnership, except to the extent that the Partnership
benefited from the Advisor not having to allocate trades among a number of
different accounts (rather than acquiring a single position for the Trading
LLC as a whole). As of June 1, 1998, MLIP consolidated the trading accounts
of nine of its multi-advisor funds (the "Multi-Advisor Funds"), including the
Partnership. The consolidation was achieved by having these Multi-Advisor
Funds invest in a single Delaware limited liability company, MM LLC, which
opened a single account with each Advisor selected. MM LLC is managed by
MLIP, has no investors other than the Multi-Advisor Funds and serves solely
as the vehicle through which the assets of such Multi-Advisor Funds are
combined in order to be managed through single rather than multiple accounts.
The placement of assets into MM LLC did not change the operations or fee
structure of the Partnership. The administrative authority over the
Partnership, as well as MM LLC, remains with MLIP.

                                       1

<PAGE>

               In addition to its investment in MM LLC, the Partnership
maintains a cash account. From time to time, MLIP allocates and reallocates
Partnership assets among its investment in MM LLC and its cash accounts in an
attempt to increase profit potential while limiting the downside risks
associated with futures and forward trading (in order to prevent Merrill
Lynch from incurring any obligations under its guarantee of a minimum Net
Asset Value per Unit, as described below). Initially, MLIP allocated
approximately 30% of the Partnership's assets in each of the SECTOR II and
SECTOR III portions to cash and approximately 70% to trading. As of December
31, 2000, 100% was invested in MM LLC for the SECTOR II Units and SECTOR III
Units.

               As of December 31, 2000, the Partnership's SECTOR II Unit
capitalization was $6,982,633 and the Partnership's SECTOR III Unit
capitalization was $13,641,228. As of December 31, 2000, the Net Asset Value
of a SECTOR II Unit originally $100 as of December 5, 1990 was $165.72 and
the Net Asset Value of a SECTOR III Unit originally $100 as of July 5, 1991
was $174.06.

               Merrill Lynch guarantees that the Net Asset Value per SECTOR
II Unit will equal at least $125.50 as of December 31, 2001 for SECTOR II
Units (the "Principal Assurance Date"). The initial Principal Assurance Date
for the SECTOR II Units and SECTOR III Units were December 31, 1995 and
September 30, 1996, respectively, at which time the minimum Net Asset Value
per Unit guaranteed by Merrill Lynch was $100 per Unit. As of January 1,
1996, the Partnership restarted its trading program for the SECTOR II Units,
setting a new Time Horizon of two years duration, with a second Principal
Assurance Date of December 31, 1997 and a minimum assurance Net Asset Value
of $100.12. As of October 1, 1996 the Partnership restarted its trading
program for the SECTOR III Units, setting a new Time Horizon of two years
duration, with a second Principal Assurance Date of September 30, 1998 and a
minimum assurance Net Asset Value of $100.92. As of January 1, 1998, the
Partnership restarted its trading program for the SECTOR II Units, setting a
new Time Horizon of two years duration, with a third Principal Assurance Date
of December 31, 1999 and a minimum assurance Net Asset Value of $125.10. As
of November 1, 1998 the Partnership restarted its trading program for the
SECTOR III Units, setting a new Time Horizon of two years duration, with a
third Principal Assurance Date of October 31, 2000 and a minimum assurance
Net Asset Value of $132.74. As of January 1, 2000, the Partnership restarted
its trading program for the SECTOR II Units, setting a new Time Horizon of
two years duration, with a fourth Principal Assurance Date of December 31,
2001. On November 1, 2000, the Partnership did not renew its guarantee for a
new two-year Time Horizon for SECTOR III Units. The Partnership continues the
trading program for SECTOR III Units without the guarantee. This guarantee
serves only as a form of "stop loss," limiting the maximum loss which
investors who retain their Units until the Principal Assurance Date can
incur. MLIP will manage the percentage of assets allocated to trading so as
to minimize the likelihood that payments will be required to be made by
Merrill Lynch pursuant to the guarantee. As a result, the assets allocated to
trading may be reduced or eliminated if the present value of the guarantee
payments approaches the current value of the assets in the Partnership. The
determination of the percentage of assets allocated to trading is affected by
the performance of the Partnership, the level of interest rates used in
determining the present value and the time remaining to the Principal
Assurance Date.

               Through December 31, 2000, the highest month-end Net Asset Value
per SECTOR II and SECTOR III Units were $165.72 (December 31, 2000) and $174.06
(December 31, 2000), respectively, and the lowest was $98.68 (January 31, 1991)
and 97.74 (May 31, 1992) respectively.

        (b)    FINANCIAL INFORMATION ABOUT SEGMENTS:

               The Partnership's business constitutes only one segment for
financial reporting purposes, i.e., a speculative "commodity pool." The
Partnership does not engage in sales of goods or services.

                                       2

<PAGE>

        (c)    NARRATIVE DESCRIPTION OF BUSINESS:

               GENERAL

               The Partnership trades (currently, through its investment in
MM LLC) in futures, options on futures, forwards and options on forward
contracts in major sectors of the world economy, with the objective of
achieving substantial capital appreciation over time, while assuring
investors of at least a predetermined minimum Net Asset Value per Unit as of
the Principal Assurance Date with respect to the SECTOR II Units.

               MLIP is the Partnership's trading manager, with responsibility
for selecting Advisors to manage MM LLC's assets, allocating and reallocating MM
LLC assets among different Advisors and determining the percentage of the
Partnership's assets to be invested in MM LLC.

               Considered as a whole, the Partnership (currently, through an
investment in MM LLC) trades in a diversified range of international markets.
Certain Advisors, considered individually, concentrate primarily on trading
in a limited portfolio of markets. The composition of the "sectors" included
in the Partnership's portfolio varies substantially over time.

               MLIP may, from time to time, direct certain individual Advisors
to manage their Partnership accounts as if they were managing more equity than
the actual capital allocated to them.

               One of the objectives of the Partnership is to provide
diversification for a limited portion of the risk segment of the Limited
Partners' portfolios. Commodity pool performance has historically demonstrated a
low degree of performance correlation with traditional stock and bond holdings.
Since it began trading, the Partnership's returns have, in fact, frequently been
non-correlated with the United States stock and bond markets.

               MERRILL LYNCH'S " PRINCIPAL PROTECTION" UNDERTAKING TO THE
PARTNERSHIP

               Merrill Lynch, the parent company of the Merrill Lynch
organization, which includes MLIP and MLF, has agreed to contribute
sufficient capital to the Partnership so that it will have adequate funds,
after adjustment for all liabilities to third parties, and so that the Net
Asset Value per SECTOR II Units will be no less than $125.50 as of the
Principal Assurance Date. This guarantee, which is effective only as of the
Principal Assurance Date, is a guarantee only of the minimum assured Net
Asset Value, (plus distributions, if any), not a guarantee against the loss
of the use of time value of such investment or a guarantee of profit. This
guarantee is a general, unsecured obligation of Merrill Lynch.

               OPERATION OF THE PARTNERSHIP AFTER THE FOURTH PRINCIPAL
ASSURANCE DATES

               When the Partnership reached its third Principal Assurance
Dates for the SECTOR II and SECTOR III Units, December 31, 1999 and
September 30, 2000, respectively, MLIP "restarted" the Partnership's trading
program and the Merrill Lynch guarantee for a two-year period ending
December 31, 2001 for SECTOR II Units and notified investors that SECTOR III
Units would continue to operate without a "Principal Protection" feature as of
October 1, 2000. MLIP may determine to terminate the Partnership's operations
with respect to the SECTOR II Units as of its fourth Principal Assurance Date,
to extend the Merrill Lynch guarantee for a certain period of time (resetting
the minimum Net Asset Value per Unit guaranteed by Merrill Lynch) or to
continue to operate the Partnership without a "Principal Protection" feature,
as with the SECTOR III Units. All investors are given notice no later than 45
days prior to the Principal Assurance Date for their Units as to what the
operation of the Partnership (if any) will be with respect to such Units
after such current Principal Assurance Date.

                                       3
<PAGE>

               USE OF PROCEDES AND INTEREST INCOME

               MARKET SECTORS

               The Partnership (currently, through its investment in MM LLC)
trades in a diversified group of markets under the direction of multiple
independent Advisors. These Advisors from time to time materially alter the
allocation of their overall trading commitments among different market
sectors. Except in the case of certain trading programs which are
purposefully limited in the markets which they trade, there is essentially no
restriction on the commodity interests which may be traded by any Advisor or
the rapidity with which an Advisor may alter its market sector allocations.

               MARKET TYPES

               The Partnership trades (currently, through its investment in MM
LLC) on a variety of United States and foreign futures exchanges. Substantially
all of the Partnership's non-exchange trading takes place in the highly liquid,
institutionally-based currency forward markets.

               Many of the Partnership's currency trades are executed in the
spot and forward foreign exchange markets (the "FX Markets") where there are
no direct execution costs. Instead, the participants, banks and dealers in
the FX Markets take a "spread" between the prices at which they are prepared
to buy and sell particular currencies and such spreads are built into the
pricing of the spot or forward contracts with the Partnership. In its
exchange of futures for physical ("EFP") trading, the Partnership acquires
cash currency positions through banks and dealers. The Partnership pays a
spread when it exchanges these positions for futures. This spread reflects,
in part, the different settlement dates of the cash and the futures
contracts, as well as prevailing interest rates, but also includes a pricing
spread in favor of the banks and dealers, which may include a Merrill Lynch
entity.

               As in the case of its market sector allocations, the
Partnership's commitments to different types of markets -- U.S. and non-U.S.,
regulated and non-regulated -- differ substantially from time to time as well
as over time.

               CUSTODY OF ASSETS

               The majority of the Partnership's assets are currently held in
customer accounts at Merrill Lynch.

               CASH MANAGEMENT

               As of June 2000, the Partnership, through MM LLC, began an
Income Enhancement Program, whereas, a portion of its assets is invested in
Commercial Paper. This was done to improve the yield on the cash assets not
required for margin for trading purposes at MLF. These holdings generally
have maturities of 30, 60 or 90 days and are held to maturity.

               INTEREST PAID BY MERRILL LYNCH ON THE PARTNERSHIP'S U.S. DOLLAR
AND NON DOLLAR ASSETS

               A majority of the Partnership's U.S. dollar assets are
maintained at MLF. On assets held in U.S. dollars, Merrill Lynch credits the
Partnership with interest at the prevailing 91-day U.S. Treasury bill rate.
The Partnership is credited with interest on any of its assets and net gains
actually held by Merrill Lynch in non-U.S. dollar currencies at a prevailing
local rate received by Merrill Lynch. Merrill Lynch may derive certain
economic benefit, in excess of the interest which Merrill Lynch pays to the
Partnership, from possession of such assets.

               Merrill Lynch charges the Partnership Merrill Lynch's cost of
financing realized and unrealized losses on the Partnership's non-U.S.
dollar-denominated positions.

                             -----------------------

                                       4
<PAGE>

               CHARGES

               The following table summarizes the charges incurred by the
Partnership during 2000, 1999 and 1998.

<TABLE>
<CAPTION>
                        2000                         1999                         1998
                    -------------------------------------------------------------------------------
                                 Average                      Average                  Average
                     Dollar      Month-End       Dollar        Month-End     Dollar     Month-End
   Charges           Amount      Net Assets      Amount        Net Assets    Amount     Net Assets
---------------------------------------------------------------------------------------------------
<S>                 <C>          <C>             <C>           <C>           <C>        <C>
Brokerage
Commissions         $        -        0.00%      $       -          0.00%    $1,015,128      2.79%
Administrative
Fees                         -        0.00%              -          0.00%        29,004      0.08%
Profit Shares                -        0.00%              -          0.00%       301,645      0.83%
                    -------------------------------------------------------------------------------
Total               $        -        0.00%      $       -          0.00%    $1,345,777      3.70%
                    ===============================================================================
</TABLE>


                              --------------------

               Subsequent to October 1, 1996, Brokerage Commissions,
Administrative Fees and Profit Shares are not representative of the actual
amounts paid by the Partnership, because the Partnership paid the bulk of
these fees as an investor in the Trading LLCs or MM LLC. See "Description of
Current Charges." During 1999 and 2000, the Partnership had 100% of its
assets invested in MM LLC.

               The foregoing table does not reflect the bid-ask spreads paid by
the Partnership on its forward trading, or the annual benefits which may be
derived by Merrill Lynch from the deposit of certain of the Partnership's U.S.
dollar assets in offset accounts.

               The Partnership's SECTOR II Units average month-end Net Assets
during 2000, 1999 and 1998 equaled $7,447,420, $9,538,889, and $11,959,856,
respectively.

               The Partnership's SECTOR III Units average month-end Net
Assets during 2000, 1999 and 1998 equaled $16,059,786, $21,081,593, and
$24,385,480, respectively.

               Subsequent to October 1, 1996, interest income is not
representative of the actual amounts received by the Partnership since a bulk
of the interest was received by the Partnership as an investor in the Trading
LLCs or MM LLC. During 1999 and 2000 the Partnership invested 100% of its
assets in MM LLC.

               During 1998, the Partnership's SECTOR II Units earned $238,969
in interest income, or 2.00% of the Partnership's average month-end Net
Assets. During 1998, the Partnership's SECTOR III Units earned $359,189 in
interest income, or 1.47% of the Partnership's average month-end Net Assets.

               The variations in charges are primarily due to placing assets in
the Trading LLCs and MM LLC (See Item 7).

                                       5
<PAGE>

                         DESCRIPTION OF CURRENT CHARGES
<TABLE>
<CAPTION>

RECIPIENT       NATURE OF PAYMENT              AMOUNT OF PAYMENT
---------       -----------------              -----------------
<S>             <C>                            <C>
MLF             Brokerage Commissions          A flat-rate monthly commission of 0.729 of 1% (an 8.75%
                                               annual rate) of the Partnership's month-end assets allocated
                                               to trading. As of December 31, 2000, 100% of the
                                               Partnership's assets were allocated to trading in MM LLC.

                                               Prior to the investment in MM LLC, the round-turn (each
                                               purchase and sale or sale and purchase of a single futures
                                               contract) equivalent rate of the Partnership's flat-rate
                                               Brokerage Commissions was approximately $52, and $63 for
                                               SECTOR II and SECTOR III Units, respectively, for the year
                                               ended December 31, 1998. During 1999 and 2000, the
                                               Partnership paid round-turn commissions through its
                                               investments in MM LLC. The estimated aggregate round turn
                                               commission rate for MM LLC for the years ended December 31,
                                               2000 and 1999 are $82 and $136, respectively.

MLF             Use of Partnership assets      Merrill Lynch may derive certain economic benefit from the
                                               deposit of certain of the Partnership's U.S. dollar assets
                                               in offset accounts.

MLIP            Administrative Fees            The Partnership pays MLIP a monthly Administrative Fee equal to
                                               .021 of 1% (a 0.25% annual rate) of the Partnership's month-end
                                               assets allocated to trading. As of December 31, 2000, 100% of the
                                               Partnership's assets were allocated to trading in MM LLC. MLIP
                                               pays all of the Partnership's routine administrative costs.

Other           Bid-ask spreads                Bid-ask spreads on forward and related trades.
Counterparties


Advisors        Profit Shares                  All Advisors can receive quarterly or annual Profit Shares
                                               ranging from 20% to 23% (depending on the Advisor) of any New
                                               Trading Profit achieved by their Partnership account. Profit
                                               Shares are also paid upon redemption of Units and upon the net
                                               reallocation of assets away from an Advisor. New Trading Profit
                                               is calculated separately in respect of each Advisor,
                                               irrespective of the overall performance of the Partnership. The
                                               Partnership may pay substantial Profit Shares during periods
                                               when it is incurring significant overall losses.

Advisors        Consulting Fees                MLF pays the Advisors annual Consulting Fees up to 2% of the
                                               Partnership's average month-end assets allocated to them for
                                               management, after reduction for a portion of the brokerage
                                               commissions.

MLF;            Extraordinary expenses         Actual costs incurred; none paid to date.
  Others
</TABLE>


               REGULATION

               MLIP, the Advisors and MLF are each subject to regulation by
the Commodity Futures Trading Commission (the "CFTC") and the National
Futures Association ("NFA"). Other than in respect of its periodic reporting
requirements under the Securities Exchange Act of 1934, the Partnership
itself is generally not subject to regulation by the Securities and Exchange
Commission. However, MLIP itself is registered as an "investment adviser"
under the Investment Advisers Act of 1940.

               (i) through (xii)-- not applicable.

               (xiii) The Partnership has no employees.

                                       6

<PAGE>

        (d)    FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
               EXPORT SALES:

               The Partnership trades, through its investment in MM LLC, on a
number of foreign commodity exchanges. The Partnership does not engage in the
sales of goods or services.

ITEM 2:  PROPERTIES

               The Partnership does not use any physical properties in the
conduct of its business.

               The Partnership's only place of business is the place of
business of MLIP (Merrill Lynch Investment Partners Inc., Princeton Corporate
Campus, 800 Scudders Mill Road - Section 2G, Plainsboro, New Jersey 08536).
MLIP performs all administrative services for the Partnership from MLIP's
offices.

ITEM 3:  LEGAL PROCEEDINGS

               Merrill Lynch -- the sole stockholder of Merrill Lynch Group,
Inc. (which is the sole stockholder of MLIP) -- as well as certain of its
subsidiaries and affiliates have been named as defendants in civil actions,
arbitration proceedings and claims arising out of their respective business
activities. Although the ultimate outcome of these actions cannot be predicted
at this time and the results of legal proceedings cannot be predicted with
certainty, it is the opinion of management that the result of these matters will
not be materially adverse to the business operations or financial condition of
MLIP or the Partnership.

               MLIP itself has never been the subject of any material
litigation.

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               The Partnership has never submitted any matter to a vote of its
Limited Partners.

                                    PART II

ITEM 5:  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Item 5(a)

        (a)    MARKET INFORMATION:

               There is no established public trading market for the Units,
nor will one develop. Limited Partners may redeem Units as of the end of each
month at Net Asset Value. Units redeemed prior to the applicable Principal
Assurance Date are not entitled to any benefits under the Merrill Lynch
guarantee.

        (b)    HOLDERS

               As of December 31, 2000, there were 489 holders of SECTOR II
Units, including MLIP, and 674 holders of SECTOR III Units, including MLIP.

        (c)    DIVIDENDS:

               The Partnership has made no distributions, nor does MLIP
presently intend to make any distributions in the future.

Item 5(b)

               Not applicable.

                                       7

<PAGE>

ITEM 6:  SELECTED FINANCIAL DATA

The following selected financial data has been derived from
the audited financial statements of the Partnership:

<TABLE>
<CAPTION>
                               FOR THE YEAR    FOR THE YEAR     FOR THE YEAR     FOR THE YEAR     FOR THE YEAR
                                  ENDED           ENDED            ENDED            ENDED            ENDED
                               DECEMBER 31,    DECEMBER 31,     DECEMBER 31,     DECEMBER 31,     DECEMBER 31,
STATEMENT OF OPERATIONS           2000            1999             1998             1997             1996
----------------------------------------------------------------------------------------------------------------
<S>                            <C>             <C>              <C>              <C>              <C>
Revenues:

Trading (Loss) Profit:
     Realized                  $           -   $           -    $  1,169,961     $  4,629,434     $  6,760,623
     Change in Unrealized                  -               -        (671,259)          98,218       (1,911,494)
                               ---------------------------------------------------------------------------------
     Total Trading Results                 -               -         498,702        4,727,652        4,849,129
                               ---------------------------------------------------------------------------------

Interest Income                            -               -         598,158        1,551,360        2,009,987
                               ---------------------------------------------------------------------------------
     Total Revenues                        -               -       1,096,860        6,279,012        6,859,116
                               ---------------------------------------------------------------------------------

Expenses:
     Brokerage Commissions                 -               -       1,015,128        2,732,838        4,213,004
     Administrative Fees                   -               -          29,004           78,081          113,600
     Profit Shares                         -               -         301,645          530,099          364,863
                               ---------------------------------------------------------------------------------
     Total Expenses                        -               -       1,345,777        3,341,018        4,691,467
                               ---------------------------------------------------------------------------------
Income (Loss) from Investments      919,869        (378,712)       1,406,243        1,708,985        2,258,309
                               ---------------------------------------------------------------------------------
Net Income (Loss)              $    919,869    $   (378,712)    $  1,157,326     $  4,646,979      $ 4,425,958
                               =================================================================================
</TABLE>
<TABLE>
<CAPTION>
                                DECEMBER 31,    DECEMBER 31,     DECEMBER 31,     DECEMBER 31,     DECEMBER 31,
BALANCE SHEET DATA                 2000            1999             1998             1997             1996
----------------------------------------------------------------------------------------------------------------
<S>                             <C>             <C>              <C>              <C>              <C>
Partnership Net Asset Value     $20,623,861     $28,036,376      $33,791,182      $40,650,457      $42,584,105
Net Asset Value
  per SECTOR II Unit                $165.72         $156.88          $158.74          $156.37          $143.42
Net Asset Value
  per SECTOR III Unit               $174.06         $164.77          $166.72          $159.00          $140.75
                               ---------------------------------------------------------------------------------
</TABLE>

The variations in income statement line items are primarily due to investing in
Trading LLCs and in MM LLC.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                          MONTH-END NET ASSET VALUE PER SECTOR II UNIT
----------------------------------------------------------------------------------------------------------------------------
        Jan.      Feb.      Mar.      Apr.      May      June      July      Aug.      Sept.     Oct.      Nov.     Dec.
----------------------------------------------------------------------------------------------------------------------------
<S>     <C>       <C>       <C>       <C>       <C>      <C>       <C>       <C>       <C>       <C>       <C>      <C>
 1996   $129.65   $123.52   $122.45   $124.82   $123.17  $121.68   $124.98   $123.96   $127.55   $139.16   $149.40  $143.42
----------------------------------------------------------------------------------------------------------------------------
 1997   $150.05   $149.10   $148.60   $149.07   $147.91  $150.77   $158.23   $155.56   $155.08   $154.49   $154.47  $156.37
----------------------------------------------------------------------------------------------------------------------------
 1998   $155.45   $151.98   $150.75   $145.57   $146.58  $146.91   $147.09   $155.15   $158.46   $157.97   $158.11  $158.74
----------------------------------------------------------------------------------------------------------------------------
 1999   $156.73   $158.61   $157.90   $159.63   $158.37  $158.96   $159.28   $158.21   $155.90   $151.64   $155.71  $156.88
----------------------------------------------------------------------------------------------------------------------------
 2000   $157.42   $156.23   $153.51   $153.71   $155.98  $154.07   $151.86   $152.35   $147.76   $148.02   $156.47  $165.72
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
                                       8

<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                          MONTH-END NET ASSET VALUE PER SECTOR III UNIT
----------------------------------------------------------------------------------------------------------------------------
        Jan.      Feb.      Mar.      Apr.      May      June      July      Aug.      Sept.     Oct.      Nov.     Dec.
----------------------------------------------------------------------------------------------------------------------------
<S>     <C>       <C>       <C>       <C>       <C>      <C>       <C>       <C>       <C>       <C>       <C>      <C>
 1996   $132.39   $120.96   $120.08   $127.41   $124.26  $123.53   $125.16   $122.91   $126.15   $138.27   $142.98  $140.75
----------------------------------------------------------------------------------------------------------------------------
 1997   $147.15   $149.44   $150.41   $146.96   $146.16  $147.82   $156.23   $151.82   $153.39   $153.98   $155.24  $159.00
----------------------------------------------------------------------------------------------------------------------------
 1998   $159.04   $156.52   $159.24   $151.72   $154.09  $154.27   $154.50   $162.95   $166.44   $165.93   $166.05  $166.72
----------------------------------------------------------------------------------------------------------------------------
 1999   $164.61   $166.59   $165.84   $167.65   $166.34  $166.96   $167.29   $166.16   $163.74   $159.27   $163.54  $164.77
----------------------------------------------------------------------------------------------------------------------------
 2000   $165.34   $164.09   $161.23   $161.44   $163.83  $161.82   $159.50   $160.02   $155.20   $155.46   $164.34  $174.06
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

               Pursuant to CFTC policy, monthly performance is presented only
from January 1, 1996 even though Units were outstanding prior to such date.

                      THE SECTOR STRATEGY FUND (SM) II L.P.
                                 SECTOR II UNITS
                               DECEMBER 31, 2000
    TYPE OF POOL: SELECTED-ADVISOR/PUBLICLY-OFFERED/"PRINCIPAL PROTECTED"(1)
                     INCEPTION OF TRADING: December 5, 1990
                      AGGREGATE SUBSCRIPTIONS: $136,410,000
                       CURRENT CAPITALIZATION: $6,982,633
                    WORST MONTHLY DRAWDOWN(2): (4.73)% (2/96)
              WORST PEAK-TO-VALLEY DRAWDOWN(3): (8.01)% (8/97-4/98)
                                  -------------
              NET ASSET VALUE PER UNIT, DECEMBER 31, 2000: $165.72

<TABLE>
<CAPTION>
          -----------------------------------------------------------------------------------
                                     MONTHLY RATES OF RETURN(4)
          -----------------------------------------------------------------------------------
          Month                   2000        1999        1998        1997       1996
          <S>                     <C>         <C>         <C>         <C>        <C>
          -----------------------------------------------------------------------------------
          January                 0.34%      (1.26)%     (0.59)%      4.62%      3.59%
          -----------------------------------------------------------------------------------
          February               (0.76)       1.20       (2.23)      (0.63)     (4.73)
          -----------------------------------------------------------------------------------
          March                  (1.74)      (0.45)      (0.81)      (0.34)     (0.86)
          -----------------------------------------------------------------------------------
          April                   0.13        1.09       (3.44)       0.32       1.93
          -----------------------------------------------------------------------------------
          May                     1.48       (0.79)       0.69       (0.78)     (1.32)
          -----------------------------------------------------------------------------------
          June                   (1.23)       0.37        0.23        1.93      (1.21)
          -----------------------------------------------------------------------------------
          July                   (1.43)       0.20        0.12        4.95       2.71
          -----------------------------------------------------------------------------------
          August                  0.33       (0.68)       5.48       (1.69)     (0.82)
          -----------------------------------------------------------------------------------
          September              (3.01)      (1.46)       2.13       (0.31)      2.90
          -----------------------------------------------------------------------------------
          October                 0.17       (2.73)      (0.31)      (0.38)      9.10
          -----------------------------------------------------------------------------------
          November                5.71        2.69        0.09       (0.01)      7.36
          -----------------------------------------------------------------------------------
          December                5.91        0.75        0.40        1.23      (4.00)
          -----------------------------------------------------------------------------------
          Compound Annual
          Rate of Return          5.63%      (1.17)%      1.51%       9.02%     14.60%
          -----------------------------------------------------------------------------------
</TABLE>


                                       9
<PAGE>
               (1) Pursuant to applicable CFTC regulations, a "Multi-Advisor"
fund is defined as one that allocates no more than 25% of its trading assets
(i.e., assets committed to trading) to any single manager. As the Partnership
may allocate more than 25% of its trading assets to one or more Advisors, it is
referred to as a "Selected-Advisor" fund. Applicable CFTC regulations define a
"Principal Protected" fund as one which is designed to limit the loss of
participants' initial investment. MLIP's trading leverage policies and the
Merrill Lynch guarantee limit Limited Partners' losses on their Units at the
Principal Assurance Date to 20% of the Net Asset Value of their units as of
the beginning of each new Time Horizon.
               (2) Worst Monthly Drawdown represents the largest negative
Monthly Rate of Return experienced since January 1, 1996 by the SECTOR II
Units; a Drawdown is measured on the basis of month-end Net Asset Value only,
and does not reflect intra-month figures.
               (3) Worst Peak-to-Valley Drawdown represents the greatest
percentage decline since January 1, 1996 from a month-end cumulative Monthly
Rate of Return without such cumulative Monthly Rate of Return being equaled or
exceeded as of a subsequent month-end. For example, if the Monthly Rate of
Return was (1)% in each of January and February, 1% in March and (2)% in April,
the Peak-to-Valley Drawdown would still be continuing at the end of April in the
amount of approximately (3)%, whereas if the Monthly Rate of Return had been
approximately 3% in March, the Peak-to-Valley Drawdown would have ended as of
the end of February at approximately the (2)% level.
               (4) Monthly Rate of Return is the net performance of the SECTOR
II Units during the month of determination (including interest income and after
all expenses have been accrued or paid) divided by the total equity of the
Partnership as of the beginning of such month.

                      THE SECTOR STRATEGY FUND (SM) II L.P.
                                SECTOR III UNITS
                                DECEMBER 31, 2000
    TYPE OF POOL: SELECTED-ADVISOR/PUBLICLY-OFFERED/"PRINCIPAL PROTECTED"(1)
                       INCEPTION OF TRADING: July 5, 1991
                      AGGREGATE SUBSCRIPTIONS: $194,005,000
                       CURRENT CAPITALIZATION: $13,641,228
                    WORST MONTHLY DRAWDOWN(2): (8.64)% (2/96)
              WORST PEAK-TO-VALLEY DRAWDOWN(3): (9.30)% (2/96-3/96)
                                  -------------
              NET ASSET VALUE PER UNIT, DECEMBER 31, 2000: $174.06
<TABLE>
<CAPTION>
          -----------------------------------------------------------------------------------
                                     MONTHLY RATES OF RETURN(4)
          -----------------------------------------------------------------------------------
          Month                   2000        1999        1998        1997       1996
          <S>                     <C>         <C>         <C>         <C>        <C>
          -----------------------------------------------------------------------------------
          January                 0.34%      (1.26)%      0.03%       4.55%      3.22%
          -----------------------------------------------------------------------------------
          February               (0.76)       1.20       (1.58)       1.56      (8.64)
          -----------------------------------------------------------------------------------
          March                  (1.74)      (0.45)       1.73        0.65      (0.73)
          -----------------------------------------------------------------------------------
          April                   0.13        1.09       (4.72)      (2.29)      6.10
          -----------------------------------------------------------------------------------
          May                     1.48       (0.79)       1.56       (0.54)     (2.47)
          -----------------------------------------------------------------------------------
          June                   (1.23)       0.37        0.08        1.14      (0.59)
          -----------------------------------------------------------------------------------
          July                   (1.43)       0.20        0.15        5.69       1.31
          -----------------------------------------------------------------------------------
          August                  0.33       (0.68)       5.47       (2.82)     (1.79)
          -----------------------------------------------------------------------------------
          September              (3.01)      (1.46)       2.14        1.03       2.63
          -----------------------------------------------------------------------------------
          October                 0.17       (2.73)      (0.31)       0.38       9.60
          -----------------------------------------------------------------------------------
          November                5.71        2.69        0.07        0.82       3.41
          -----------------------------------------------------------------------------------
          December                5.91        0.75        0.40        2.42      (1.56)
          -----------------------------------------------------------------------------------
          Compound Annual
          Rate of Return          5.63%      (1.17)%      4.81%      12.98%      9.71%
          -----------------------------------------------------------------------------------
</TABLE>
                                       10
<PAGE>

               (1) Pursuant to applicable CFTC regulations, a "Multi-Advisor"
fund is defined as one that allocates no more than 25% of its trading assets
(i.e., assets committed to trading) to any single manager. As the Partnership
may allocate more than 25% of its trading assets to one or more Advisors, it
is referred to as a "Selected-Advisor" fund. Applicable CFTC regulations
define a "Principal Protected" fund as one which is designed to limit the
loss of participants' initial investment. The SECTOR III Units of the
Partnership ceased to be Principal Protected after September 30, 2000.

               (2) Worst Monthly Drawdown represents the largest negative
Monthly Rate of Return experienced since January 1, 1996 by the SECTOR III
Units; a Drawdown is measured on the basis of month-end Net Asset Value only,
and does not reflect intra-month figures.

               (3) Worst Peak-to-Valley Drawdown represents the greatest
percentage decline since January 1, 1996 from a month-end cumulative Monthly
Rate of Return without such cumulative Monthly Rate of Return being equaled or
exceeded as of a subsequent month-end. For example, if the Monthly Rate of
Return was (1)% in each of January and February, 1% in March and (2)% in April,
the Peak-to-Valley Drawdown would still be continuing at the end of April in the
amount of approximately (3)%, whereas if the Monthly Rate of Return had been
approximately 3% in March, the Peak-to-Valley Drawdown would have ended as of
the end of February at approximately the (2)% level.

               (4) Monthly Rate of Return is the net performance of the SECTOR
III Units during the month of determination (including interest income and after
all expenses have been accrued or paid) divided by the total equity of the
Partnership as of the beginning of such month.

ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

ADVISOR SELECTIONS

               The Partnership's results of operations depend on MLIP's ability
to select Advisors and the Advisors' ability to trade profitably. MLIP's
selection procedures and trading leveraging analysis, as well as the Advisors'
trading methods, are confidential, so that substantially the only available
information relevant to the Partnership's results of operations is its actual
performance record to date. Because of the speculative nature of its trading,
the Partnership's past performance is not necessarily indicative of its future
results.

               MLIP has made and expects to continue making frequent changes to
both trading asset allocations among Advisors and Advisor combinations as well
as from time to time adjusting the percentage of the Partnership's assets
committed to trading.

                  MLIP's decision to terminate or reallocate assets among
Advisors is based on a combination of numerous factors. Advisors are, in
general, terminated primarily for unsatisfactory performance, but other factors
-- for example, a change in MLIP's or an Advisor's market outlook, apparent
deviation from announced risk control policies, excessive turnover of positions,
changes in principals, commitment of resources to other business activities,
etc. -- may also have a role in the termination or reallocation decision. The
market judgment and experience of MLIP's principals is an important factor in
its asset allocation decisions.

               MLIP has no timetable or schedule for making Advisor changes or
reallocations, and generally makes a medium- to long-term commitment to all
Advisors selected. There can be no assurance as to the frequency or number of
Advisor changes that may take place in the future, or as to how long any of the
current Advisors will continue to manage assets for the Partnership.

                                       11

<PAGE>

               GENERAL

               A number of the Advisors are trend-following traders, whose
programs do not attempt to predict price movements. No fundamental economic
supply or demand analyses are used by these Advisors, and no macroeconomic
assessments of the relative strengths of different national economies or
economic sectors are evaluated. Instead, the programs apply proprietary
computer models to analyze past market data, and from this data alone attempt
to determine whether market prices are trending. These technical traders base
their strategies on the theory that market prices reflect the collective
judgment of numerous different traders and are, accordingly, the best and
most efficient indication of market movements. However, there are frequent
periods during which fundamental factors external to the market dominate
prices.

               If a trend-following Advisor's models identify a trend, they
signal positions which follow it. When these models identify the trend as having
ended or reversed, these positions are either closed out or reversed. Due to
their trend-following character, these Advisors' programs do not predict either
the commencement or the end of a price movement. Rather, their objective is to
identify a trend early enough to profit from it and detect its end or reversal
in time to close out the Partnership's positions while retaining most of the
profits made from following the trend.

               In analyzing the performance of trend-following programs,
economic conditions, political events, weather factors, etc., are not directly
relevant because only market data has any input into trading results.
Furthermore, there is no direct connection between particular market conditions
and price trends. There are so many influences on the markets that the same
general type of economic event may lead to a price trend in some cases but not
in others. The analysis is further complicated by the fact that the programs are
designed to recognize only certain types of trends and to apply only certain
criteria of when a trend has begun. Consequently, even though significant price
trends may occur, if these trends are not comprised of the type of intra-period
price movements which the programs are designed to identify, a trend-following
Advisor may miss the trend altogether.

               In the case of the Advisors who implement strategies which
rely more on discretion and market judgment, it is not possible to predict,
from their performance during past market cycles, how they will respond to
future market events.

PERFORMANCE SUMMARY

               This performance summary is an outline description of how the
Partnership performed in the past, not necessarily any indication of how it will
perform in the future. In addition, the general causes to which certain price
movements are attributed may or may not in fact have caused such movements, but
simply occurred at or about the same time.

               The Advisors, as a group, are unlikely to be profitable in
markets in which such trends do not occur. Static or erratic prices are likely
to result in losses. Similarly, unexpected events (for example, a political
upheaval, natural disaster or governmental intervention) can lead to major
short-term losses, as well as gains.

               While there can be no assurance that any Advisor will be
profitable, under any given market condition, markets in which substantial and
sustained price movements occur typically offer the best profit potential for
the Partnership.

               The performance of the Partnership is also materially affected by
the percentage of its assets allocated to trading. The greater the percentage of
the Partnership's assets allocated to trading, the greater its profit potential,
risk and performance volatility.

                                       12

<PAGE>

2000

               During 2000, all of the Partnership's assets were invested in MM
LLC. The Partnership received trading profits as an investor in MM LLC. The
following commentary of 2000 describes the trading results for MM LLC during the
year.

               The Partnership's overall trading strategy was profitable for
2000. Gains were realized by trading in the interest rate, currency and energy
markets. Losses were sustained in the agricultural, metals and stock index
sectors. Trading was volatile and unprofitable through September, however, gains
realized in the interest rate and currency markets in November and December
eradicated those losses.

               Interest rate trading was profitable for the Partnership.
Short Eurodollar trading was profitable early in the year as the European
Union ministers blamed the Euro's decline on rapid U.S. growth and fears that
the Federal Reserve would continue to increase interest rates. By mid year,
losses were incurred from U.S. Treasury bond and Euro 10- year bond trading
as investors shifted to Treasuries due to increased volatility in the NASDAQ
and other equity markets. Short Eurodollar turned unprofitable as the Euro
improved after the European Central Bank's 50 basis point repo rate hike.
Uncertainty surrounding the U.S. Presidential election caused investors to
favor the bond markets over equities, resulting in significant gains for the
Partnership's various long positions.

               Trading in the currency markets was also successful. Short
Euro positions were profitable after officials from the Group of Seven met in
January and failed to express concern about the low levels of the currency.
Despite steep interest rate hikes by the Swiss National Bank ("SNB") and the
general weakness of the Euro, the SNB said it will not keep the Swiss franc
from rising. Short British pound positions were profitable as the pound was
weak in the wake of the Bank of England's references to "sterling
overvaluation". Short Japanese yen trading yielded gains in July as the yen
finished weaker against the U.S. dollar in anticipation that the U.S. Federal
Reserve would continue to raise interest rates. Short positions in the
Canadian dollar resulted in gains as the currency weakened during November
despite worsening U.S. dollar fundamentals, a large Canadian budget surplus
and plans for tax cuts in Canada.

               Energy trading was profitable throughout the year as prices
continued to surge. Despite the possibility of OPEC increasing oil
production, crude oil prices continued to rise as such a hike would still
leave oil inventories much below normal. Light crude oil prices continued to
rise in June even though OPEC agreed to increase production on July 1. The
market was looking for a larger production hike. By November, oil prices were
pushed higher as a result of significantly lower than the previous year's
temperatures combined with a large inventory deficit.

               Agriculture trading sustained modest losses for the year. Corn
prices fluctuated early on numerous changes in weather forecasts. A USDA
grain crop report projected a 12% rise in soybean inventories from the
previous season. This led to fears of an abundance of supply, lowering
prices. Short wheat trading was beneficial in July as drought warnings issued
in early spring proved inaccurate. As a result of good global grain and
oilseed crops, supply exceeded demand, resulting in profits in short soyoil
positions at year-end.

               Metals trading alternated between profitability to
unprofitability during the year. Copper trading resulted in losses after a
Freeport, Indonesia mine announced output cuts would not be as severe, damaging
the Partnership's long positions. Gold prices declined for most of 2000 as
investors were discouraged from the drop in the Euro, severe weakness in the
Australian dollar along with sharp decreases in the South African rand and
Indian rupee. Nickel prices declined from slowing demand for stainless steel in
Europe and Asia.

               Stock index markets trading was unprofitable during a volatile
year. Signs of rising inflation fueled fears that the Federal Reserve would
continue to raise interest rates aggressively to slow the economy. S&P 500
positions sustained losses as buyers retreated due to fears of a U.S.
economic slowdown. Long positions were generally unprofitable throughout the
year, with minimal gains realized from the Partnership's short positions.

                                      13

<PAGE>

1999

               During 1999, all of the Partnership's assets were invested in
MM LLC. The Partnership received trading profits and losses as an investor in
MM LLC. The following commentary for 1999 describes the trading results for
MM LLC during the year.

               The Partnership finished 1999 with gains in energy, stock index
and agricultural trading and losses in currency, interest rate and metal
trading. Commodities spent 1999 in a transition phase, shifting from bearishness
to a more neutral position. Lack of demand, particularly in Asia, was the
dominant factor in the overall decline in commodity prices.

               Overall, the Partnership profited from trading in crude oil,
heating oil, and unleaded gas in 1999. Positions in crude oil offset losses
from short positions in natural gas and gas oil trading. In March, OPEC
ratified new production cuts totaling 1.716 million barrels per day at its
conference, which resulted in higher prices for crude. In the natural gas
markets, prices rallied sharply resulting from a decline in U.S. natural gas
production, along with high levels of energy consumption and weather scares
throughout the country. Near the end of the year, there was a continued
upward momentum in crude oil reflecting the tightening between supply and
demand and a new, higher OPEC-indicated target price.

               Stock index trading was profitable for the first half of 1999.
Also of note, the Dow Jones Industrial Average closed above the 10,000 mark for
the first time ever at the end of March, setting a record for the index, and
equity markets rallied worldwide in April and June. In the second half of the
year, the Partnership suffered losses in stock index positions as trading was
mixed due to significant volatility globally. However, there was profitable
trading in Hang Seng, Nikkei 225 and Topix Indices which resulted in gains
during November and December. Such activity depicted evidence of Japan's
stronger-than-expected recovery coupled with a sudden decline in its
unemployment rate.

               In agricultural trading, gains in live hogs and live cattle
offset losses in corn positions. Initially, the corn market continued to
struggle due to supply/demand imbalances and ongoing favorable weather in South
America. These factors also led to an increase in prices as there was a sharp
decline in crop ratings during the second half of the year. There was also a
sharp upturn in soy prices, and losses in coffee trading became evident due to
cold temperature and lack of rainfall in Brazil.

               Currency trading produced losses for the Partnership
throughout the year. Long Japanese yen positions resulted in losses despite
the yen trading higher against the U.S. dollar. The Bank of Japan lowered
rates to keep its economy sufficiently liquid to allow fiscal spending to
restore some growth to the economy and to drive down the surging yen. The
European Central Bank raised the repo rate in November due to inflation
pressures. On a trade-weighted basis, the Swiss franc ended the first quarter
to close at a seven-month low, mostly as a result of the stronger U.S.
dollar. The Canadian dollar also underwent similar fluctuations throughout
the year.

               Interest rate trading was also volatile as the flight to quality
in the bond market reversed during the first half of 1999 and the Federal
Reserve raised interest rates three times during the year. Early in the year,
interest rate trading proved unprofitable for the Partnership, which was
triggered by the Japanese Trust Fund Bureau's decision to absorb a smaller share
of futures issues, leaving the burden of financing future budget deficits to the
private sector. Interest rate trading did gain strength at mid-year as the
flight to quality in the bond market reversed and concerns about higher interest
rates in the U.S. continued to rattle the financial markets. During the third
quarter, Eurodollar trading generated losses amidst speculation of the
probability of a tightening by the U.S. Federal Reserve, which became evident
with the higher interest rates in their November 16 meeting due to concerns of
inflation. In December, the yield on the 30-year Treasury bond recently
surpassed its October high propelled by inflation worries and fears the Federal
Reserve might tighten further in 2000.

                                      14

<PAGE>

               Metals trading was mixed for the year as gold played a major part
in the volatility of the metals market. Gold had failed to maintain its status
as a safety vehicle and a monetary asset during the first half of 1999. In early
June, gold had reached its lowest level in over 20 years. A major statement from
the president of the European Central Bank stated that the member banks had
agreed not to expand their gold lending. This sent gold prices sharply higher in
late September. Unfortunately, the Partnership held short positions in gold
futures at that time. Gold prices had stabilized in the fourth quarter following
the price surge. Early in the year, burdensome warehouse stocks and questionable
demand prospects weighed on base metals as aluminum fell to a five-year low and
copper fell to nearly an 11-year low. The economic scenario for Asia, Brazil,
Europe and emerging market nations helped to keep copper and other base metals
on the defensive as demand receded with virtually no supply side response in the
second quarter. A substantial increase in Chinese imports combined with the
recovery in the rest of Asia and Europe had significantly improved demand for
aluminum pushing prices higher during December.

1998

<TABLE>
<CAPTION>
                                               Total Trading
                                                  Results
<S>                                            <C>
 Interest Rates                                $       85,850
 Stock Indicies                                      (139,134)
 Agriculture                                          518,301
 Currencies                                          (343,635)
 Energy                                               312,851
 Metals                                                64,469
                                               ---------------
                                               $      498,702
                                               ===============
</TABLE>


               Global interest rate markets provided the Partnership with its
most profitable positions for the first quarter, particularly in European bonds
where an extended bond market rally continued despite an environment of robust
growth in the United States, Canada and the United Kingdom, as well as a strong
pick-up in growth in continental Europe. In the second quarter, swings in the
U.S. dollar and developments in Japan affected bond markets, causing the
Partnership's interest rate trading to result in losses. This was turned around
in the third quarter, as markets worldwide were turned upside down and the
Partnership's non-correlation with general equity and debt markets was strongly
exhibited, and trading was particularly profitable in positions in Eurodollars,
German and Japanese bonds, and U.S. Treasury notes and bonds. Global investors
staged a major flight to quality, resulting in a significant widening of credit
spreads on a global basis. In October, investors pushed the yields on U.S.
Treasury bonds to a 31-year low. The long bond yield fell about 75 basis points
in 1998 as the world economy slowed more than expected, inflation continued to
fall, the anticipated small U.S. budget deficit turned into substantial surplus,
and the Federal Reserve lowered interest rates.

               In currency markets, results early in the year were unprofitable.
During the second quarter, strong gains were realized in positions in the
Japanese yen, which weakened during June to an eight-year low versus the
U.S. dollar. Significant gains from Japanese yen trading continued into the
third quarter, and Japan's problems spread to other sectors of the global
economy, causing commodities prices to decline as demand from the Asian
economies weakened. Japan's deepening recession and credit crunch continued
through the fourth quarter, and the Partnership achieved gains from long yen
positions.

                                      15

<PAGE>

               Trading results in stock index markets were also mixed in early
1998, despite a strong first-quarter performance by the U.S. equity market as
several consecutive weekly gains were recorded with most market averages setting
new highs. Second quarter results were profitable as the Asia-Pacific region's
equity markets weakened across the board. In particular, Hong Kong's Hang Seng
index trended downward during most of the second quarter and traded at a
three-year low. As U.S. equity markets declined in July and August, the
Partnership profited from short positions in the S&P 500, most notably during
August, when the index dropped 14.5%. Volatility in September made for a
difficult trading environment in the stock index sector, and the Partnership
incurred modest losses, although results remained profitable for the quarter and
the year overall in these markets.

               In agricultural commodity markets, 1998 began with strong gains
as live cattle and hog prices trended downward throughout the first quarter. In
the second quarter, although the U.S. soybean crop got off to a good start which
contributed to higher yield expectations and a more burdensome supply outlook,
soybean prices traded in a volatile pattern. Sugar futures maintained mostly a
downtrend, as no major buyers emerged to support the market. Similarly, coffee
prices trended downward, as good weather conditions in Central America and
Mexico increased the prospects of more output from these countries. The third
quarter resulted in losses as the U.S. soybean crop increased relative to the
USDA's production estimate as a result of timely rains, which contributed to
lower prices. These losses continued into the fourth quarter as the Partnership
was caught on the short side of the soybean complex, as the soybean supply
surplus became more manageable following the November 10th USDA reports, causing
prices to gain upward momentum.

               Gold prices began the year drifting sideways, and continued to
weaken following news in the second quarter of a European Central Bank
consensus that ten to fifteen percent of reserves should be made up of gold
bullion, which was at the low end of expectations. Gold was unable to extend
third quarter rallies or to build any significant upside momentum, resulting
in a trendless environment. This was also the case in the fourth quarter, as
gold's cost of production declined. Also, silver markets remained
range-bound, while also experiencing a significant selloff in November, and
aluminum traded at its lowest levels since 1994, with many aluminum smelters
operating at a loss.

               In energy markets, demand for crude oil in the Middle East was
affected by low oil prices early in the year, and trading resulted in losses.
Initially buoyed on concerns about a U.S.-led military strike against Iraq,
crude oil fell to a nine-year low, as the globally warm winter, the return of
Iraq as a producer and the Asian economic crisis added to OPEC's supply glut
problems. Despite production cuts initiated by OPEC at the end of March, world
oil supplies remained excessive and oil prices stood at relatively low levels
throughout the first half of 1998. Short heating oil positions in the third
quarter proved profitable for the Partnership as the market for heating oil
prices dropped to its lowest level in more than a decade. In early December, oil
and natural gas prices dropped sharply, causing continued problems for many
emerging market countries that depend on commodity exports for economic growth
and government financing. These price pressures were mainly due to excessive
supply availability and near-term weather indications that inventories would
remain at more than adequate levels even in the event of a cold Northern
Hemisphere winter. Also, the December U.S. air attack on Iraq failed to cause
any damage to oil pumping and shipping operations, and oil prices fell over 10%.

VARIABLES AFFECTING PERFORMANCE

               The principal variables which determine the net performance of
the Partnership are gross profitability and interest income. Gross profitability
is, in turn, effected by the percentage of the Partnership's assets allocated to
trading.

                                      16

<PAGE>

               During all periods set forth under "Selected Financial Data,"
the interest rates in many countries were at unusually low levels. The
interest rates in the United States (although higher than in many other
countries) negatively impacted revenues because interest income is typically
a major component of the Partnership's profitability. In addition, interest
rates are frequently associated with reduced fixed income market volatility,
and in static markets the Partnership's profit potential generally tends to
be diminished. On the other hand, during periods of higher interest rates,
the relative attractiveness of a high risk investment such as the Partnership
may be reduced as compared to high yielding and much lower risk fixed-income
investments.

               The Partnership's Brokerage Commissions and Administrative
Fees are a constant percentage of the Partnership's assets allocated to
trading. The only Partnership costs (other than the insignificant currency
trading costs) which are not based on a percentage of the Partnership's
assets (allocated to trading or total) are the Profit Shares payable to the
Advisors on an Advisor-by-Advisor basis. Gross profitability is in turn
effected by the percentages of the Partnership's assets allocated to trading.
During periods when Profit Shares are a high percentage of net trading gains,
it is likely that there has been substantial performance non-correlation
among the Advisors (so that the total Profit Shares paid to those Advisors
which have traded profitably are a high percentage, or perhaps even in
excess, of the total profits recognized, as other Advisors have incurred
offsetting losses, reducing overall trading gains but not the Profit Shares
paid to the successful Advisors) --suggesting the likelihood of generally
trendless, non-consensus markets.

               Unlike many investment fields, there is no meaningful distinction
in the operation of the Partnership between realized and unrealized profits.
Most of the contracts traded by the Partnership are highly liquid and can be
closed out at any time.

               Except in unusual circumstances, factors (e.g., regulatory
approvals, cost of goods sold, employee relations and the like) which often
materially affect an operating business have virtually no impact on the
Partnership.

LIQUIDITY; CAPITAL RESOURCES

               The Partnership borrows only to a limited extent and only on a
strictly short-term basis in order to finance losses on non-U.S. dollar
denominated trading positions pending the conversion of the Partnership's
U.S. dollar deposits. These borrowings are at a prevailing short-term rate in
the relevant currency. They have been immaterial to the Partnership's
operation to date and are expected to continue to be so.

               Substantially all of the Partnership's assets are held in cash.
The Net Asset Value of the Partnership's cash is not affected by inflation.
However, changes in interest rates could cause periods of strong up or down
price trends, during which the Partnership's profit potential generally
increases. Inflation in commodity prices could also generate price movements
which the strategies might successfully follow.

               Except in very unusual circumstances, the Partnership should
be able to close out any or all of its open trading positions and liquidate
any or all of its contract holdings quickly and at market prices. This
permits an Advisor to limit losses, as well as reduce market exposure on
short notice should its strategies indicate doing so. In addition, because
there is a readily available market value for the Partnership's positions and
assets, the Partnership's monthly Net Asset Value calculations are precise,
and investors need only wait ten business days to receive the full redemption
proceeds of their Units.

ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

               Not applicable.

                                      17

<PAGE>

ITEM 8:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

               The financial statements required by this Item are included in
Exhibit 13.01.

               The supplementary financial information ("selected quarterly
financial data" and "information about oil and gas producing activities")
specified by Item 302 of Regulation S-K is not applicable.

ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

               There were no changes in or disagreements with independent
auditors on accounting or financial disclosure.


                                    PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      (a,b)    IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS:

               As a limited partnership, the Partnership itself has no
officers or directors and is managed by MLIP. Trading decisions are made by
the Advisors on behalf of the Partnership. MLIP promotes the Partnership and
is its controlling person.

               The directors and executive officers of MLIP and their respective
business backgrounds are as follows:

<TABLE>
<S>                        <C>
RONALD S. ROSENBERG        Chairman and Director

FABIO P. SAVOLDELLI        President and Director

FRANK M. MACIOCE           Vice President and Director

STEVEN B. OLGIN            Vice President, Chief Administrative Officer and Director

MICHAEL L. PUNGELLO        Vice President, Chief Financial Officer and Treasurer
</TABLE>

               Ronald S. Rosenberg was born in 1962. Mr. Rosenberg is Chairman
and a Director of MLIP and head of the Alternative Investments Group for MLIM
Americas, which creates alternative investment products and strategies for
Merrill Lynch's large institutional and high net worth private clients. These
products include funds of funds investing in hedge funds, private equity funds,
exchange funds, as well as other specialized investment products. Most recently,
Mr. Rosenberg ran the Global Hedge Fund Sales Group and International Fixed
Income Groups which sold investment products to hedge funds worldwide. He joined
Merrill Lynch in 1995 from JP Morgan, where he was also responsible for sales
groups that sold investment products to hedge funds. Mr. Rosenberg was educated
at the Wharton Business School, where he received a Master of Business
Administration in Finance. He graduated Phi Beta Kappa from Rutgers University
with a Bachelor of Arts in Computer Science and Economics.

               Fabio P. Savoldelli was born in 1961. Mr. Savoldelli is
President and a Director of MLIP . He will oversee the Partnership's
investments. Most recently, Mr. Savoldelli was Chief Investment Officer for
the Americas at the Chase Manhattan Private Bank, responsible for managers
investing assets in international and domestic institutional, private client
and ERISA funds. Previously, he was Deputy Chief Investment Officer and Head
of Fixed Income and Foreign Exchange at Swiss Bank Corp. London Portfolio
Management International. Mr. Savoldelli was educated at the University of
Windsor, Canada, and the London School of Economics.

                                      18

<PAGE>

               Frank M. Macioce was born in 1945. Mr. Macioce is a Vice
President and a Director of MLIP and the senior legal counsel responsible for
Alternative Investments. He joined MLIM in February 2000. From 1995 to 2000, Mr.
Macioce was General Counsel of Operations, Services and Technology for Merrill
Lynch, and from 1993 to 1995 served as Merrill Lynch Investment Banking General
Counsel. From 1980 to 1993 he served as Assistant General Counsel of Merrill
Lynch responsible for Corporate Law. During his 28 years with Merrill Lynch, he
has served as a director and officer of a number of its affiliates. Mr. Macioce
graduated from Purdue University with a Bachelor of Science in Economics and
Psychology in 1967 and from Vanderbilt Law School with a Juris Doctor in 1972.
Mr. Macioce is a member of the New York Bar.

               Steven B. Olgin was born in 1960. Mr. Olgin is Vice President,
Chief Administrative Officer and Director of MLIP. He joined MLIP in July
1994 and became a Vice President in July 1995. From 1986 until July 1994, Mr.
Olgin was an associate of the law firm of Sidley & Austin. In 1982, Mr. Olgin
graduated from The American University with a Bachelor of Science in Business
Administration and a Bachelor of Arts in Economics. In 1986, he received his
Juris Doctor from The John Marshall Law School. Mr. Olgin is a member of the
Managed Funds Association's Government Relations Committee and has served as
an arbitrator for the National Futures Association. Mr. Olgin is a member of
the Illinois Bar.

               Michael L. Pungello was born in 1957. Mr. Pungello is Vice
President, Chief Financial Officer and Treasurer of MLIP. He was First Vice
President and Senior Director of Finance for Merrill Lynch's Operations,
Services and Technology Group from January 1998 to March 1999. Prior to that,
Mr. Pungello spent over 18 years with Deloitte & Touche LLP, and was a partner
in their financial services practice from June 1990 to December 1997. He
graduated from Fordham University in 1979 with a Bachelor of Science in
Accounting and received his Master of Business Administration in Finance from
New York University in 1987.

               As of December 31, 2000, the principals of MLIP had no investment
in the Partnership, and MLIP's general partner interest in the Partnership was
valued at $230,757.

               MLIP acts as general partner to eleven public futures funds
whose units of limited partnership interest are registered under the
Securities Exchange Act of 1934: The Futures Expansion Fund Limited
Partnership, ML Futures Investments II L.P., ML Futures Investments L.P.,
John W. Henry & Co./Millburn L.P., The SECTOR Strategy Fund (SM) L.P., The
SECTOR Strategy Fund (SM) V L.P., The SECTOR Strategy Fund (SM) VI L.P., ML
Global Horizons L.P., ML Principal Protection L.P., ML JWH Strategic
Allocation Fund L.P. and the Partnership. Because MLIP serves as the sole
general partner of each of these funds, the officers and directors of MLIP
effectively manage them as officers and directors of such funds.

      (c)      IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES:

               None.

      (d)      FAMILY RELATIONSHIPS:

               None.

      (e)      BUSINESS EXPERIENCE:

               See Item 10(a)(b) above.

      (f)      INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS:

               None.

      (g)      PROMOTERS AND CONTROL PERSONS:

               Not applicable.

                                      19

<PAGE>

ITEM 11: EXECUTIVE COMPENSATION

               The directors and officers of MLIP are remunerated by MLIP.
The Partnership does not itself have any officers, directors or employees.
The Partnership pays Brokerage Commissions to an affiliate of MLIP and
Administrative Fees to MLIP. MLIP or its affiliates may also receive certain
economic benefits from holding the Partnership's U.S. dollar assets. The
directors and officers receive no "other compensation" from the Partnership,
and the directors receive no compensation for serving as directors of MLIP.
There are no compensation plans or arrangements relating to a change in
control of either MLIP or the Partnership.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      (a)      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:

               As of December 31, 2000, no person or "group" is known to be or
have been the beneficial owner of more than 5% of the Units.

      (b)      SECURITY OWNERSHIP OF MANAGEMENT:

               As of December 31, 2000, MLIP owned 464 SECTOR II Units and 884
SECTOR III Units (unit-equivalent general partnership interests), which was less
than 1.1% of the total Units outstanding.

      (c)      CHANGES IN CONTROL:

               None.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      (a)      TRANSACTIONS BETWEEN MERRILL LYNCH AND THE PARTNERSHIP

               All of the service providers to the Partnership, other than
the Advisors, are affiliates of Merrill Lynch. Merrill Lynch negotiated with
the Advisors over the level of their advisory fees and Profit Shares.
However, none of the fees paid by the Partnership to any Merrill Lynch party
were negotiated, and they are higher than would have been obtained in
arm's-length bargaining.

               The Partnership pays Merrill Lynch substantial Brokerage
Commissions and Administrative Fees, as well as bid-ask spreads on forward
currency trades. The Partnership also pays MLF interest on short-term loans
extended by MLF to cover losses on foreign currency positions.

               Within the Merrill Lynch organization, MLIP is the direct
beneficiary of the revenues received by different Merrill Lynch entities from
the Partnership. MLIP controls the management of the Partnership and serves as
its promoter. Although MLIP has not sold any assets, directly or indirectly, to
the Partnership, MLIP makes substantial profits from the Partnership due to the
foregoing revenues.

               No loans have been, are or will be outstanding between MLIP or
any of its principals and the Partnership.

               MLIP pays substantial selling commissions and trailing
commissions to MLPF&S for distributing the Units. MLIP is ultimately paid back
for these expenditures from the revenues it receives from the Partnership.

      (b)      CERTAIN BUSINESS RELATIONSHIPS:

               MLF, an affiliate of MLIP, acts as the principal commodity broker
for the Partnership.

               In 2000, the Partnership, through MM LLC, expensed the
following fees: (i) Brokerage Commissions of $2,019,379 to MLF, which
included $276,915 in consulting fees earned by the Advisors; and (ii)
Administrative Fees of $57,696 to MLIP. In addition, MLIP and its affiliates
may have derived certain economic benefits from possession of the
Partnership's assets, as well as from foreign exchange and EFP trading.

               See Item 1(c), "Narrative Description of Business -- Charges" and
"Description of Current Charges" for a discussion of other business dealings
between MLIP affiliates and the Partnership.

                                      20

<PAGE>
      (c)      INDEBTEDNESS OF MANAGEMENT:

               The Partnership is prohibited from making any loan to
management or otherwise.

      (d)      TRANSACTIONS WITH PROMOTERS:

               Not applicable.

                                     PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
      (a)1.    FINANCIAL STATEMENTS:                                                         PAGE
                                                                                             ----
<S>                                                                                          <C>
               Independent Auditors' Report                                                     1

               Statements of Financial Condition as of December 31, 2000 and 1999               2

               For the years ended December 31, 2000, 1999 and 1998
                        Statements of Operations                                                3
                        Statements of Changes in Partners' Capital                              4

               Notes to Financial Statements                                                 5-12

      (a)2.    FINANCIAL STATEMENT SCHEDULES:
</TABLE>

               Financial statement schedules not included in this Form 10-K have
been omitted for the reason that they are not required or are not applicable or
that equivalent information has been included in the financial statements or
notes thereto.

      (a)3.    EXHIBITS:

               The following exhibits are incorporated by reference or are filed
               herewith to this Annual Report on Form 10-K:

DESIGNATION                DESCRIPTION

3.01(i)                   Amended and Restated Certificate of Limited
                          Partnership of the Registrant, dated July 27, 1995.

EXHIBIT 3.01(i):          Is incorporated herein by reference from Exhibit
                          3.01(d) contained in the Registrant's report on Form
                          10-Q for the Quarter Ended June 30, 1995.

3.01(ii)                  Limited Partnership Agreement of the Partnership.

EXHIBIT 3.01(ii):         Is incorporated herein by reference from
                          Exhibit 3.01(a) contained in Amendment No. 1 (as
                          Exhibit A) to the Registration Statement (File No.
                          33-34432) filed on May 25, 1990 on Form S-1 under the
                          Securities Act of 1933 (the "Registrant's Registration
                          Statement").

10.01(o)                  Form of Advisory Agreement between the Partnership,
                          Merrill Lynch Investment Partners Inc., Merrill Lynch
                          Futures Inc. and each Advisor.

EXHIBIT 10.01(o):         Is incorporated herein by reference from Exhibit
                          10.01(o) contained in the Registrant's report on Form
                          10-Q for the Quarter Ended June 30, 1995.

10.02(a)                  Form of Consulting Agreement between each Advisor of
                          the Partnership and Merrill Lynch Futures Inc.

EXHIBIT 10.02(a):         Is incorporated herein by reference from Exhibit
                          10.02(a) contained in the Registrant's Registration
                          Statement.

10.03(a)                  Form of Customer Agreement between the Partnership and
                          Merrill Lynch Futures Inc.

                                      21
<PAGE>

EXHIBIT 10.03(a):         Is incorporated herein by reference from Exhibit
                          10.03(a) contained in the Registrant's Registration
                          Statement.

10.05                     Merrill Lynch & Co., Inc. Guarantee.

EXHIBIT 10.05:            Is incorporated herein by reference from Exhibit 10.05
                          contained in the Registrant's
                          Registration Statement.

10.06                     Foreign Exchange Desk Service Agreement among Merrill
                          Lynch Investment Bank, Merrill Lynch Investment
                          Partners Inc., Merrill Lynch Futures Inc. and the
                          Partnership.

EXHIBIT 10.06:            Is incorporated herein by reference from Exhibit 10.06
                          contained in the Registrant's report on Form 10-K for
                          the year ended December 31, 1996.

10.07(a)                  Form of Advisory and Consulting Agreement Amendment
                          among Merrill Lynch Investment Partners Inc., each
                          Advisor, the Partnership and Merrill Lynch Futures
                          Inc.

EXHIBIT 10.07(a):         Is incorporated herein by reference from Exhibit
                          10.07(a) contained in the Registrant's report on Form
                          10-K for the year ended December 31, 1996.

10.07(b)                  Form of Amendment to the Customer Agreement among the
                          Partnership and MLF.

EXHIBIT 10.07(b):         Is incorporated herein by reference from Exhibit
                          10.07(b) contained in the Registrant's report on Form
                          10-K for the year ended December 31, 1996.

13.01                     2000 Annual Report and Independent Auditors' Report.

EXHIBIT 13.01:            Is filed herewith.

13.01 (a)                 2000 Annual Report and Independent Auditors' Report
                          for the following Trading Limited Liability Company
                          sponsored by Merrill Lynch Investment Partners Inc.:
                          ML Multi-Manager Portfolio LLC

EXHIBIT 13.01(a):         Is filed herewith.

28.01                     Prospectus of the Partnership dated June 1, 1990.

EXHIBIT 28.01:            Is incorporated by reference as filed with the
                          Securities and Exchange Commission pursuant to Rule
                          424 under the Securities Act of 1933 (File No.
                          33-34432) filed on June 7, 1990.

      (b)      REPORT ON FORM 8-K:

               No reports on Form 8-K were filed during the fourth quarter
of 2000.


                                      22
<PAGE>

                                   SIGNATURES

               Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                            THE SECTOR STRATEGY FUND (SM) II L.P.
                            (SAFETY OF EQUITY CAPITAL; TARGETING OVERALL RETURN)

                            By:  MERRILL LYNCH INVESTMENT PARTNERS INC.
                                   General Partner

                            By: /s/ Ronald S. Rosenberg
                                -----------------------
                                     Ronald S. Rosenberg
                                     Chairman and Director (Principal
                                     Executive Officer)


               Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, this report has been signed on March 30, 2001
by the following persons on behalf of the Registrant and in the capacities
indicated.

<TABLE>
<CAPTION>
Signature                           Title                                                          Date
---------                           -----                                                          ----

<S>                                 <C>                                                            <C>
/s/ Ronald S. Rosenberg             Chairman and Director                                          March 30, 2001
-----------------------             (Principal Executive Officer)
Ronald S. Rosenberg

/s/ Fabio P. Savodelli              President and Director                                         March 30, 2001
-----------------------
Fabio P. Savodelli

/s/ Steven B. Olgin                 Vice President, Chief Administrative                           March 30, 2001
-----------------------             Officer, and Director
Steven B. Olgin

/s/ Michael L. Pungello             Vice President, Chief Financial Officer and Treasurer          March 30, 2001
-----------------------             (Principal Financial and Accounting Officer)
Michael L. Pungello
</TABLE>


(Being the principal executive officer, the principal financial and accounting
officer and a majority of the directors of Merrill Lynch Investment Partners
Inc.)

<TABLE>
<S>                                         <C>                                                    <C>
MERRILL LYNCH INVESTMENT                    General Partner of Registrant                          March 30, 2001
 PARTNERS INC.
</TABLE>

By/s/ Ronald S. Rosenberg
  -----------------------
      Ronald S. Rosenberg


                                      23
<PAGE>

                      THE SECTOR STRATEGY FUND -SM- II L.P.

                                 2000 FORM 10-K

                                INDEX TO EXHIBITS

                                     EXHIBIT

Exhibit 13.01             2000 Annual Report and Independent Auditors' Report

Exhibit 13.01(a)          2000 Annual Report and Independent Auditors' Report
                          for the following Trading Limited Liability Company
                          sponsored by Merrill Lynch Investment Partners Inc.:
                          ML Multi-Manager Portfolio LLC


                                      -24-